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China refuses USA order to reduce oil imports from Iran

The U.S. also said that it would exert "maximum economic and diplomatic pressure" on other countries to stop buying crude oil from Iran.

She added that while China may not cut Iranian oil imports, it did not indicate that it will increase imports either, raising the question of whether or not there will be 1 million barrels per day of Iranian oil take off the market by the end of this year and whether OPEC can make up for the shortfall.

The matter is awkward for Germany because the government is also committed to keeping alive the 2015 deal it, along with the USA and other world powers, signed with Iran which provides incentives in exchange for Tehran not pursuing a nuclear weapon.

The rhetoric between the US and Iran remains heated, despite Trump tweeting last week that he would be willing to meet with Iranian President Hassan Rouhani.

In May, Trump controversially pulled America out of the nuclear deal Obama agreed with Iran in 2015. They're the world's largest state sponsor of terror.

Outrage by Iran's leaders when Trump took the decision in May is now being supercharged by small street protests against the government over the economy and the threat of more as the situation worsens. The Iranian rial has fallen to 99,000 to the USA dollar despite a government-imposed rate of 44,000.

The first phase hits on Tuesday with blocks on financial transactions and imports of raw materials, as well as sanctions on Iran's automotive sector and commercial aircraft purchases. The sanctions targeting Iran's oil industry could cut off a crucial source of hard currency.

To keep its shipment flowing Iran has offered insurance for oil cargo and ships to supply oil to India, its top oil client after China.

"This exercise was conducted with the aim of controlling and safeguarding the safety of the global waterway [in the Persian Gulf]", said General Ramazan Sharif, spokesman for Iranian Revolutionary Guards according to state news agency IRNA.

The strait connects the Persian Gulf to the Arabian Sea.

"There are rising concerns, all this time we have uncertainties on the Iran sanction and uncertainties over tariffs, as we certainly don't need any more trigger for a significant swing [in prices] in one way or another", said Jim Ritterbusch, an analyst in Galena, Illinois. He did not elaborate.